Amid the current Covid crisis, Vietnam, the third largest textiles and apparel exporter in the world, is fast emerging as an alternative to China as companies continue to shift their bases from China. Further, the Ministry of Industry and Trade’s Trade Promotion Agency in Vietnam has plans to build an image of Vietnam as a prestigious country with high-quality goods and services.
Vietnam, the third largest textiles and apparel exporter in the world, has held its ground against the COVID-19 pandemic with its best and comprehensive strategies and implementation.
Despite a population of over 96 million and sharing its land border with China, Vietnam has recorded only 288 Covid-19 cases and zero deaths till May 10, 2020. The country’s highly effective containment of the Covid-19 pandemic proved to be an advantage for its investment environment, helping economic recovery and taking the country in a new position on the global stage, according to planning and investment minister Nguyen Chi Dung.
Raw Material Shortage
Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association told that Vietnam’s garment industry started facing difficulties in the beginning of March due to supply interruptions. The local companies had enough raw materials for the first quarter, but they started facing shortage of materials from the 2nd quarter as they were not able to import materials from their key suppliers such as China, Japan and South Korea.
GDP Growth Estimations by Ministry of Planning and Investment
Last year, Vietnam achieved impressive GDP growth of 7.02 per cent, surpassing the set target by the National Assembly and bringing the economy scale to more than $262 billion, the highest level so far.
According to the Ministry of Planning and Investment, the country’s 2020 GDP growth would have been 6.25 per cent (0.55 percentage points lower) despite the target of 6.80 per cent approved by the National Assembly of the country, if the epidemic had persisted only for first quarter of this year. If it remained in second quarter, the GDP growth would decrease to 5.96 per cent (0.84 percentage points lower than the original target). This forecast was made before the epidemic spread in South Korea and Japan.
As per the report from Bảo Việt Securities Company (BSC), China, South Korea and Japan accounted for the 1/3rd of Vietnam’s export revenue and 2/3rd of its import value in 2019. BSC analysts also had predicted that the country’s GDP growth rate would have been lowered by 1.05 percentage points from 6.80 per cent target if the outbreak had lingered only for the 1st quarter, while it would reduce by 1.55 percentage points from the target if the epidemic remained for 6 months.
In May 2020, as per the General Statistics Office of Vietnam (GSO), country’s GDP fell to 3.80 per cent in the 1st quarter of 2020, as compared to 6.80 per cent in the same period in 2019. The International Monetary Fund (IMF) has also projected that the economy will expand to only 2.70 per cent this year.
Government’s Initial Suggestions in March 2020
1. People must implement policies more seriously, quickly, drastically and efficiently.
2. Information must be provided in an accurate, transparent and comprehensive manner in order to improve market sentiments and to reduce unnecessary overreactions.
3. The COVID-19 Prevention and Control Steering Committee must have enough staff with in-depth economic and investment expertise to make sound economic contributions and recommendations.
4. The Government must monitor the situation continuously to stabilise the macro-economy, while ensuring liquidity. Debt rescheduling and freezing for businesses affected by COVID-19 should be considered.
5. If possible, the State Bank of Vietnam should create conditions for commercial banks to cut lending rates.
6. Fee reductions and rescheduling of insurance and tax payments should be implemented immediately for vulnerable business groups.
7. Tax reductions must be thought-out.
In fact, many commercial banks have already reduced the lending interest rates for businesses affected by COVID-19. Few proposals related to tax reductions have already been taken care.
Challenges
1. Protection of health of workers and support of their livelihood.
2. Smooth customs clearance and import-export procedures at border gates.
This is also an opportunity for Vietnam to assess partners and markets, and review measures to manage risks and to promote the development of cashless transactions and digital transformation.
Country’s Exports Scenario
As per WTO data, Vietnam’s total import and export turnover moved to $235.5 billion in 2019 from $242.6 billion in 2018. Exports from Vietnam have increased by 4.70 per cent from January to the end of April, the General Bureau of Statistics reported in the beginning of the May 2020. The sales reached $82.9 billion, according to the agency. In the first nine months of 2019, exports to the US jumped by 34.80 per cent year on year.
Textiles and Garment Exports
In 2019, Vietnam reaped roughly $32.60 billion from exporting textiles and garments, up 6.90 per cent against 2018, according to the office. Data from the Vietnam Textile and Apparel Association (VITAS) showed that garment and textile exports in the first four months fell 6.60 per cent year-on-year to $10.64 billion. Meanwhile, the total import value was $6.39 billion, down 8.76 per cent compared to the same period last year.
Approximately 15 groups of products with sales exceeding a billion dollars were reaffirmed as the mainstay of exports including textiles and clothing ($10.64 billion). Country’s textile and garment exports in April decreased by 20 per cent compared to March, according to VC of VITAS.
Exports of fibres, clothes and garments fell between 6 to 22 per cent in the first four months of this year as compared to same period of previous year.
Optimistically, Vietnam’s export value would achieve the mark of $35 billion this year, down 10 per cent year-on-year. In a realistic scenario, the industry’s export value is estimated to reach about $33.5 billion with 15 per cent drop. In a worst case, the export value would remain between $30 billion and $31 billion in 2020 with a plunge of 23 per cent.
Garment Exports
Vietnam is mainly focused on the garment business. Vietnam has imported up to 89 per cent of fabrics (55 per cent from China/16 per cent from South Korea/12 per cent from Taiwan/6 per cent from Japan). The US and EU account for more than 60 per cent of the country’s garment exports.
Vietnam’s garment exports have fallen by 9.07 per cent year on year in the 1st quarter of this year and imports by 16.59 per cent. The US and European buyers have suspended or cancelled orders since mid-March, according to the Vietnam National Textile and Garment Group (Vinatex), whose 1st quarter revenue dropped by 7 per cent year on year.
For the first four months of this year, export value moved down by about 6 per cent to $8.27 billion for garment products, 0.30 per cent to $664 million for fabric products, 11.50 per cent to $1.19 billion for yarn products and 6 per cent to $354 million for textile materials.
Vietnamese garment manufacturers predominantly focus on the simplest cut-make-trim (CMT) model where buyers control and own all the pre- and post-production processes. CMT production accounts for approximately 65 per cent of Vietnam’s total exports, while the more advanced business models, like Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) that allow for higher profit margins account for only 35 per cent.
Higher Exports to Canada and Mexico
Vietnam got benefitted with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to gain strong growth in exports to Canada and Mexico. According to the Ministry of Industry and Trade (MoIT), Canada and Mexico are the two CPTPP members that have yet to sign bilateral free trade agreement (FTAs) with Vietnam.
In January and February 2020, Vietnam’s exports to Canada rose by 20.39 per cent to $578 million year on year. Canada is a potential market for Vietnam for multiple products including textiles and footwear. For 1st two months, textile and apparel export value exceeded $100 million, up 5.86 per cent year on year. Vietnam’s export value to Mexico moved to $497.2 million in for the same period. Of which, textiles and garments contributed for $16.3 million.
During the period from Jan 1 until March 15, many product groups have recorded the high export growth from Vietnam to Canada and Mexico including textiles and garments with contribution of $5.88 billion in total exports.
Country’s Imports Scenario
Vietnam imported $11.5 billion of textiles and clothing from China in 2019, according to the general Department of Customs (GDC).
Vietnam imported over $13.3 billion worth of clothing and earned roughly $32.60 billion from exporting textiles and garments, according to the office.
Garments Import
Vietnam approximately imported $2.4 billion worth clothes in the 1st quarter of this year, posting a year-on-year decrease of 17.70 per cent, according to the country’s General Statistics Office as China and South Korea are country’s largest cloth importing markets. Between January and March, Vietnam imported 363,000 tonnes of cotton worth $591 million, down 4.60 per cent in volume and 16.90 per cent in value. Vietnam spent over $510 million in the import of 251,000 tonnes of yarn, down 9.50 per cent in value and up 0.70 per cent in volume.
Vietnam imported over worth $3.6 billion clothes in the first four months of this year, posting a year-on-year decrease of 10.90 per cent, according to the country’s Ministry of Industry and Trade. Between January and April, Vietnam imported 543,000 tonnes of cotton worth $893 million, up 4.20 per cent in volume and down 8 per cent in value. The country also spent more than $758 million importing 369,000 tonnes of yarn in the same period, down 2.10 per cent in value and up 8.70 per cent in volume.
Material imports for garment business has fallen by 3 per cent to $5.2 billion in the first 4 months of this year. According to Truong Van Cam, deputy chairman of VITAS, more dampening figures were expected as most of the cancelled and delayed contracts were for May and June.
For first four months of this year, import value for cotton dropped by 8 per cent to $893 million, 2.50 per cent to $758 million for yarn products, 11 per cent to $3.63 billion for fabric products and 5.80 per cent to $1.11 billion for textile materials. Due to the ongoing pandemic, it is expected to move down in the month of May and June 2020.
In 2019, Vietnam poured over $13.3 billion in importing cloth, up 4.40 per cent year-on-year; nearly $2.6 billion in importing cotton, down 14.80 per cent and more than $2.40 billion importing yarn, down 0.50 per cent, according to the country’s General Statistics Office.
Removal of Special Status of Vietnam from the US and EU-Vienam Free Trade Agreement (EVFTA)
But the US has removed the country from its list of developing nations or least developed nations. This is not specifically for Vietnam but also for different countries such as China, Hong Kong, India, Indonesia, Malaysia, Thailand, and Singapore. This has affected the country’s preferential treatment. Vietnam must avoid the origin fraud and trans-shipment as it may cause US to impose tariffs on its products.
But the effect of the removal of Vietnam from the list of developing nations or least developed nations receiving the US preferential trade benefits would be minimal as Vietnam has applied subsidies of 2 per cent to goods in all its countervailing duties (CVD) investigations, according to Le Trieu Dung from the trade remedies department under the Vietnamese ministry of industry and trade (MOIT). It could be problematic in the long run if the US further investigates Vietnamese exports and the subsidies applied, according to a ‘Vietnam Briefing’ document released recently by pan-Asia multi-disciplinary professional services firm Dezan Shira & Associates.
EVFTA (EU-Vietnam Free Trade Agreement)
The country’s textiles and clothing industry has been facing difficulties in implementing and taking advantage of European Union-Vietnam Free Trade Agreement (EVFTA), which may officially come into force in July.
Textile stocks in the country has increased in February following the ratification of the EVFTA, but textile companies continue to face difficulties due to heavy dependence on imported raw materials and machinery as well as reduced demand worldwide.
Vietnam’s textile and garment industry is heavily dependent on imported machinery and raw materials. Out of $280 billion annual spending of the EU textiles and garments imports from the world, Vietnam contributed for less than 2 per cent.
According to the executive director of Vietnam Textile and Garment Group (Vinatex) Cao Huu Hieu, the country’s textile and garment export earnings from the EU market moved up by 2.23 per cent to $4.5 billion in 2019 from 2018. When the EVFTA comes into effect, 42.50 per cent of tariff lines imposed on Vietnam’s textiles and garments would come to an end and the rest would be eliminated after 3 to 7 years.
Chairman of the board of directors of TNG Investment and Trading JSC Nguyen Van Thoi told that the enterprises that meet the rules of origin would have great advantages to enjoy tax incentives and boost exports. The agreement sets very high requirements relating to origin, certification of origin, food safety, and information transparency and production environment.
COVID-19 Impact
Order Cancellation from the US and the EU and Production Cut in Vietnam
As per the data from country’s labour ministry, the COVID-19 pandemic has impacted 15 per cent production cut in Vietnam in March. It has directly impacted 2.80 million workers in the labour-intensive garment and textile industry as firms have reduced shifts and stopped overtime.
Vietnam garment makers have been facing the cancellation of orders from the EU and the US due to spread of COVID-19 pandemic. A French company recently have cancelled orders, placed with garment maker TNG in the northern province of Thai Nguyen. According to the director of the company, the EU accounted for 40 per cent of the company’s exports. The US buyers have also cancelled or postponed their orders. He said that about 200 containers which were to be sent to US and EU, remained in the country by the end of April 2020, each of them worth around $100,000.
On March 17, the EU has closed its borders for 30 days due to the pandemic. Despite the ban on goods, the country’s exports are expected to fall by 8 per cent for the bloc in the first and second quarter due to lower demand. A HCMC textiles company that mainly exports to the US got notified in the end of 3rd week of March that its buyer would not place order for three weeks.
Sea shipments to the US in March were postponed to April and May, and buyers had asked to stop the ongoing production of hundreds of thousands of products. The revenues of the firms in the first quarter fell 20 per cent year-on-year; the company has been delaying debt repayment to banks. In the end of March 2020, manufacturers of textiles and clothing had requested to delay their debt repayment deadlines, lower interest rates and asked for provision of financial support for employees’ wages to help overcome the difficult time.
The EU and the US together account for approximately 60 per cent of the industry’s export value. The US accounts for 45 per cent and the EU accounts for 15 per cent, according to Vietnam Customs. In the first two months of this year, textile exports to the US rose to 5.30 per cent year-on-year to $2.25 billion, while that to the EU rose 0.30 per cent to $570 million.
By the end of March, many Vietnamese textiles and clothing companies received notices from their US and EU partners that they would temporarily stop receiving goods for 3 weeks to one month. The manufacturers were expected to face a huge loss in the upcoming period. Hence all the textiles and clothing players proposed government to quickly disburse approved economic stimulus packages and consider partial use of the unemployment insurance fund and social insurance fund to help businesses continue paying their workers. They also requested the Ministry of Finance and the banking system to lower interest rates or give interest-free loans, which could be used to pay workers until production activities and trade returned to normal.
According to chairman of Viet Thang Jean CO, Ltd, it would take at least two months in the US and EU to control the pandemic. The US accounts for 30 to 35 per cent and the EU 20 per cent of the company’s total export turnover. About 40 per cent of existing fabrics would be abandoned or sold at low prices. Sudden stopping of imports compelled the enterprises to stock multiple containers that were on the way to US and EU ports. It increased the expenses of the firms, according to a Vietnamese media report.
The maximum textile orders in May and June are set to fall by 70 per cent as major buyers in the US and EU have stopped signing new contracts due to lower consumption. The markets such as India, South Korea and Japan cannot make up for the reduced demand from the two major markets, which account for over 60 per cent of textile and garments exports, according to the Ministry of Industry and Trade. The textile exports have fallen by 8.90 per cent year-on-year to $6.5 billion. The CEO of Hanoi-based Vietnam National Textile and Garment Group (Vinatex) Le Tien Truong had stated that these unprecedented challenges could cost the industry $472 million in revenue, and millions could lose their jobs.
The ministry proposed that local banks should lower interest rates and prolong debt payment deadlines for these businesses. It has also suggested that the Ministry of Finance should delay payment of taxes and fees until the end of the year.
Vietnam-US Trade
In January and February 2020, Vietnam exported apparels worth $2.38 billion to the US, marking a 3.50 per cent growth. This accounted for 18.80 per cent of total apparel imports by the US. Vietnam’s share in the US apparel market was 16.17 per cent in the corresponding period of 2019 and this indicates the share has significantly surged in 2020.
Trade between Vietnam and the US surged to $19.5 billion in the first quarter of 2020, with a trade surplus of $12.4 billion, according to the General Department of Vietnam Customs. Vietnam exported $15.95 billion worth of commodities to the US between January and March 2020, representing a year-on-year increase of 19.90 per cent and accounted for 25.50 per cent of the total value. Of the export items, six reported revenue of $1 billion or above, including garments & textiles and footwear.
The US remained the largest importer of Vietnamese garment & textile products in first quarter with a turnover of $3.85 billion, accounting for 47 per cent of the country’s total garment & textile export revenue.
Embassy Support
On 24th March, ambassador of Việt Nam to US, Ha Kim Ngọc told that the US government has not announced a policy to suspend imports of Vietnamese garment and textile products. Many players such as Macy’s, TJ Maxx, Walmart and Target had announced temporary closure or reduction of the opening time of stores until the end of March. Source: fashionatingworld.com – Mar 24, 2020
Job Losses
The Vietnam National Textile and Garment Group (Vinatex) on March 25 informed that Vietnam’s textiles and clothing industry might suffer a loss of approximately $472.92 million if export orders continue to be halted, delayed and cancelled by the end of May.
According to the report, from mid-March, the export orders of the industry were continuously cancelled, suspended, and temporarily halted, leading to a shortage of jobs in April and May this year. Without policy adjustment, many enterprises lost their liquidity by the end of April. The unemployment rate dropped from 30 per cent to 50 per cent from April to May, according to Vinatex. The estimated loss of Vietnam’s textiles and clothing business was above $214.96 million with 30 per cent unemployment rate; the country generally imports around $1.5 billion worth of raw materials every month. If the situation lasts longer, the industry will lose up to $128.97 million every month.
It was predicted that if 20 per cent of orders got cancelled, $300 million worth of raw materials would remain unused and would create high inventories. Thus, the industry would lose total 50 per cent of the inventory value in April and May, equivalent to around $300 million. Vinatex alone would lose about $24 million.
In the end of March 2020, Vinatex asked its members to find opportunities to produce PPEs to export for prevention of the disease such as face masks, medical clothes, and single use clothes from nonwoven fabrics by applying a flexible working regime, reduced working hours to around 32 to 40 hours per week, after reaching an agreement with workers; to lower expenses and asking for exemption or delay of the payment of social insurance, unemployment insurance, and union dues. Vinatex proposed the National Assembly, the Government and relevant ministries and departments to allow the export of face masks and clothes for the prevention of the disease and extend loans of the State Bank of Vietnam and commercial banks.
Industry leader Vinatex contemplated a furlough of up to 50,000 workers. Approximately, 30 per cent to 50 per cent of jobs were supposed to disappear by May, according to Vinatex CEO Le Tien Truong. The company has 200 or so factories in Vietnam and more than 100,000 workers within the group.
In Hanoi city of Vietnam, travel of nonessential items was banned. Factories were open but there were no orders. The wages worked out to $130 a month in regions with the cheapest labour costs. The Vietnamese government had rolled out $2.67 billion aid package for displaced workers and distressed businesses.
Textile industry representatives from six Asian countries had issued a joint statement on April 9, urging clothing brands to fully compensate suppliers when cancelling orders. Clients including H&M have kept the purchasing contracts for products that have reached the production stage, but a number of apparel companies requested extension on payments for completed orders, according to a Bangladeshi industry group.
Vietnam’s Textile Association told that approximately 70 per cent of garment manufacturers reduced shifts and rotation of workers in March, with an additional 10 per cent in April and May. By June 2020, the estimated loss to the industry could reach $508 million.
Production Shift: Conventional Clothing to PPE
Many garment producers in the country have invested in producing face masks as a solution to cope with difficult time and take the opportunities arising from the supply shortage. Some players have received export orders worth millions of dollars which is a positive sign for the garment industry. The export value of face masks from January 1 to April 19 was $63 million which was too small compared to the total export value of textile and garments at more than $10 billion in the first four months of the year, according to Vitas.
In April 2020, Garment 10 Corporation Joint Stock company received an export order for 400 million medical face masks worth $52 million, together with orders for 20 million cloth masks from a US partner and 2 million cloth masks and 6 million medical face masks from a German partner.
TNG in the northern province of Thai Nguyen has also shifted production from garments to masks and has targeted two million units. TNG Investment and Trading Joint Stock company exported millions of anti-bacterial cloth masks to the EU during March 2020. TNG also invested in the production of medical face masks which were expected to start in May 2020. The company’s 400 workers worked overtime to meet the demand. The price of each mask is approximately 82 cents.
Anti-bacterial cloth masks boosted the company’s sales in the domestic market in the first quarter of this year by 10 per cent against the same period last year. According to the Ministry of Industry and Trade, approximately 50 domestic producers which reported to the ministry alone, had a total production capacity of 8 million face masks per day. Nam Dinh Silk Textile Joint Stock company is now capable of producing anti-bacterial cloth.
According to Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, the government should allow the export of medical masks to support domestic producers in overcoming this difficult time. This is the time for domestic producers to grasp the opportunity of export as production is much higher than the domestic demand.
Approximately, 50 per cent workers of GarmentTech Pro at southern province of Vietnam named Long An, started the manufacturing of masks in March 2020. The company approximately consumes 4 tonnes of fabric a day for making masks. Eight square metre fabric pieces are cleaned, dried, flattened and then cut into small pieces.
By the end of April 19, over 415 million face masks were exported from Vietnam. The Ministry of Industry and Trade told that local manufacturers have a total production capacity of 40 million face masks per day, or about 1.2 billion a month. With full capacity, the entire garment and textile sector can produce 100 million face masks per day, or about 3 billion a month.
As estimated by VITAS, the country’s garment and textile businesses are able to produce approximately 150 million to 200 million face masks a month, which can absolutely meet domestic demand for epidemic prevention and control besides maintaining exports.
Vietnamese trade offices abroad have also shared a helping hand in seeking business partners to export these items to their host countries. Recently, the government promulgated Resolution No 60/NQ-CP on licences for export of medical face masks, which regulates that medical face masks can be exported without caps on export volume. Under the government’s Resolution 20/NQ-CP dated February 28, in the context of the COVID-19 pandemic, medical face masks could be exported only for the purpose of international aid and assistance provided by the Vietnamese government. In addition, the export volume could be a maximum of 25 per cent of the output.
Vietnamese businesses have faced certain difficulties in meeting mask quality standards from the importing countries. In order to export masks to the EU and the US, Vietnamese firms must obtain a CE marking and FDA certification respectively, which indicate that a product meets the appropriate safety and environmental protection standards. The country could face competitive issues with other countries with better standards in their textile and garment sectors, including China, India and Pakistan, after recovery from the pandemic. Vinatex’s face mask output is 28-30 million a month and it has the capacity to deliver 50 million face masks a month, if necessary.
Government Support for PPE Business
In order to mitigate the impact of COVID-19 on businesses, the Ministry of Finance (MoF) recently has added non-woven fabrics for protective clothing to the list of goods subject to import tax exemption. Earlier the MoF had proposed the Prime Minister to exempt import tax on medical face masks and raw materials for mask production at the beginning of February.
Recently, the ministry has collected opinions from ministries, branches and business associations to complete the draft decree amending and supplementing Decree 134/2016/ND-CP on export and import tax. Regarding the draft decree amending Decree 134, the MoF has submitted documents to the government and the PM proposing exemptions of import tax for raw materials, supplies and components for processing and manufacturing export products.
This regulation aims to remove problems to promote the production and export of high value-added products to remove difficulties for enterprises operating in the field of footwear, textiles and garments.
Manufacturing Shift from China to Vietnam
Outbreak of COVID-19 compelled companies to shift from China to other countries. As per a study by Nomura Group on 56 companies, 26 companies went to Vietnam. It has geographical and cultural proximity with the communist nation China with similar political system. The companies prefer autocratic communist countries where there are no barriers such as bureaucratic lethargy and democratic red tape available.
Vietnam minimised the red tape and increased investment in infrastructure, education, and health. An average Vietnamese personnel is more skilled than average Indian personnel due to the skill-based education system in Vietnam. In Vietnam, the court and the executive are not equal but under the legislative, which is filled with only single party members. Therefore, once the legislative clears a project, there are no additional hurdles.
Country’s Investigation for PFY Dumping by China, India, Others
The Ministry of Industry and Trade (MoIT) has launched an investigation that may result in anti-dumping duties on polyester filament yarn (PFY) originating from China, India, Indonesia and Malaysia.
The request submitted on November 7 last year, said that PFY imports from the above-mentioned countries has surged, causing significant damage to the local PFY manufacturing industry. Fabrics used in Vietnam’s apparel industry are mainly made up of three types of yarn including PFY yarn, polyester staple fibre (PSF) and natural fibre (mainly cotton).
PFY accounts for around 30 per cent of total consumption. Country’s designed capacity of PFY is estimated at 350,000 tonnes per year. Under the provisions of the Law on Foreign Trade Management, the ministry can also apply provisional anti-dumping measures. In addition, anti-dumping duties may be imposed within 90 days prior to the imposition of provisional anti-dumping duties.
Vietnam National Brand (Vietnam Value) Programme for 2020-30
According to the Vietnam National Brand (Vietnam Value) Programme for 2020-30, the Ministry of Industry and Trade’s Trade Promotion Agency would set up plans to build an image of Vietnam as a prestigious country with high-quality goods and services.
The development of Vietnam’s national brand is a long-term programme and would be carried out through promoting individual product brands. Government issued regulations on building, managing and implementing the Vietnam National Brand Programme last year. The programme aims to build on national competitiveness.
Targets of the Programme
• Promote images of over 1,000 products as national brands.
• 10 per cent rise in the number of the most valuable brands listed by the world’s major ratings agencies.
• Approximately, 90 per cent of enterprises nationwide would be made aware of a brand’s importance to their production, business and investment activities. All products that obtain national brand recognition would be promoted in the domestic and key export markets.
According to global rating agencies, this programme has contributed to increasing the value of Vietnam’s national brand by 20 per cent on an average annually.
Government’s Initiative for Successful Implementation of Programme
1. Management of programme and coordination of ministries, sectors, localities and relevant organisations to help domestic manufacturers to develop products according to Vietnam’s national brand criteria.
2. Promotion of communication activities for this programme at home and abroad according to the regulations on building, managing and implementing the Vietnam National Brand Programme.
3. Boosting the awareness among local players about the role of brands in production, business and investment.
4. Collection of proposals on the development and protection of brands from localities, organisations and enterprises and implementation of programme accordingly.
5. New national brands would be selected every two years according to strict regulations to ensure fairness and transparency.
6. Enterprises that are awarded a national brand would be allowed to use Vietnam Value, the national brand logo, and the national brand identity system.
7. Coordination with relevant agencies to manage and inspect the use of the national brand to prevent activities that have a bad impact on the prestige and image of the national brand at home and abroad.
Government Support amid COVID-19 pandemic to Help Businesses to Build and Promote Brands in Local and Overseas Markets under the National Brand Programme
For the textile industry, demand is expected to increase gradually after the crisis passes, according to Le Tien Truong, director of the Vietnam National Textile and Garment Group (VINATEX).
1. Government has guided the country’s trade officials overseas to organise events and promote Vietnamese products in foreign markets.
2. The ministry has offered indirect support and online consultancy services for local businesses to improve product design and brand development.
3. Government cooperated with localities to build trade promotion programmes for products with geographical indicators, collective trademarks and national brands on the global market via e-commerce platforms, trade promotion and overseas diplomatic events.
4. Government has cooperated with foreign trade promotion organisations to carry out market research and find new export markets for products with competitive advantages.
5. It has strengthened activities connecting local businesses with major distributors in the domestic market to boost local consumption.
Stimulating Three Support Industries
The Vietnamese government planned to stimulate three support industries including textiles and garments in the northern region, a key economic hub. By the end of 2020, support industries would contribute to approximately 18 per cent of production in the local manufacturing and processing sector, and the index of industrial production (IIP) of support industries would expand by more than 12 per cent to boost economic growth.
An international trade fair and exhibition, seminars and training on corporate governance and production management for senior managers of local support industry firms have been arranged in the Hanoi city this year. Foreign producers from Japan, Taiwan, Hong Kong, and Thailand could also participate in order to connect with local manufacturers and improve chances of becoming part of the industry’s global supply chains.
It would also support the firms in research and development, technology transfer and innovation, and send specialists to assist them in receiving technology transfers and purchasing copyrights and patents.
Future Business Targets
1. Establishing a resilient supply chain of fabrics and other raw materials which relies on the development of local fabric production.
2. Leveraging FTAs, especially the newly signed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to explore new export markets.
3. Making the necessary investments to advance from the labour-intensive CMT model towards more capital-intensive models that allow for higher profit margins and more control and resilience to external shocks. OEM and ODM capable firms have proven to be more resilient and better equipped to quickly respond to the pandemic.
As schools and businesses reopened after the Reunification Day and International Labour Day Holiday, traffic congestion in major cities such as Hanoi and Ho Chi Minh City also returned on Monday, May 4, 2020. But the country continued to take precautions by limiting the gathering of people and making face mask wearing mandatory.
